Food to stay fierce says Scotmid chief

Last issue we reported on an increase in Scotmid’s profit in the first half of its trading year. Speaking to Scottish Grocer, chief executive John Brodie said we are still in tough times.

The Breadwinner Bakery service being trialled in six Scotmid stores.

SCOTLAND’S biggest independent co-op, and owner of one of Britain’s most significant c-store chains, Scotmid saw turnover and profit move slightly upwards in its interim results announced last month.

Chief executive John Brodie reckoned it was a satisfactory result in times when many food prices were subject to deflation and the business has gone through significant change, including the integration of several stores following last year’s merger with Penrith Co-op.
“Penrith is a factor in the sales increase,” he said. “But equally we have some closed Semichems that were around last year.”
Although the society does not give details of its individual division’s departments’ performances, he said he had to be reasonably happy that its food retail operation was ahead of market trends as reported in the Scottish Retail Consortium/KPMG Retail Sales Monitor.
But the food stores had faced a series of challenges in the period and he expected that to continue, he said.
“Undoubtedly the biggest one is the economic background.

John Brodie, chief executive, Scotmid.

“There’s increasing competition. There’s pressure on margin both from Co-operative Retail Trading Group’s trying to find a more competitive pricing proposition, something that we are supportive of, and our own investment in certain key lines – our £1 bread, £1 milk and other staples at the £1 price point that we fund ourselves.”
The market is tough and that means costs have to be carefully watched, but it’s also increasingly competitive so service and development have to be maintained, he stressed.
“We’ve done well to control the cost base and continue to drive the business forward,” he said.
“You have things like the roll-out of in-store bakery centres, you’ve got a partnership with Breadwinner, an artisan baker that we’re trialling in six stores.
“You have further local produce introduced and 25 stores trialling self-scanning.
“There’s investment in energy technology to improve energy efficiency and reduce costs.
“There’s a whole series of initiatives going on with everyone working hard to offset the background economic position.”
No new stores had opened in the six months period but the company had been investing substantially in its existing estate, he said. The society will continue with two food store formats, core Scotmids and the black fascia premium fresh outlets.